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Why Is Boeing (BA) Up 7.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Boeing (BA - Free Report) . Shares have added about 7.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Boeing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Boeing Q2 Earnings Miss Estimates, Sales Decline Y/Y
Boeing incurred adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.93. However, the bottom line improved from the year-ago quarter’s loss of $5.82.
Including one-time items, the company posted GAAP loss of $4.20 per share compared with loss of $5.21 registered in the second quarter of 2019.
Revenues
In the quarter under review, Boeing’s revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate of $12.61 billion by 6.3%. The top line declined25% from the year-ago quarter’s figure of $15.75 billion. This decline was due to lower year-over-year revenues that the company’s segments recorded in the reported quarter, except its defense unit.
Total Backlog
Backlog at the end of second-quarter 2020 slipped to $408.7 billion from $438.6 billion at the end of first-quarter 2020.
Segmental Performances
Commercial Airplane: Revenues at this segment plunged 65% to $1.63 billion due to lower delivery volume. The segment incurred operating loss of $2.76 billion compared to loss of $4.95 billion in the year-ago quarter.
Boeing delivered 20 commercial planes during the quarter under review, down 78%.
Backlog for this segment remains healthy with over 4,500 airplanes valued at $326 billion.
Boeing Defense, Space & Security (BDS): This segment recorded revenues worth $6.59 billion in the second quarter, reflecting almost no year-over-year change. While COVID-19 had an adverse impact on derivative aircraft programs, higher volume across the remainder of the portfoliooffset that impact.
Meanwhile, this unit generated operating income of $600 million, compared with $975 million in the year ago quarter.
Backlog at BDS was $64 billion, 31% of which comprised orders from international clients.
Global Services: Revenues at this segment declined 23% to $3.49 billion on account of COVID-19 impacts. Moreover, this unit incurred operating loss of $672 million against operating income of $687 million in the year-ago quarter.
Boeing Capital Corporation (BCC): This segment reported quarterly revenues of $69 million compared with $75 million registered in the year-ago quarter.
At the end of second-quarter 2020, BCC's portfolio balance was $2.1 billion.
Financial Condition
Boeing exited the second quarter with cash and cash equivalents of $20 billion, and short-term and other investments of $12.44 billion. At the end of 2019, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $58.46 billion at the end of the reported quarter, up from $19.96 billion at 2019 end.
Boeing’s operating cash outflow at the end of the second quarter was $9.58 billion against cash inflow of $2.20 billion at the end of June 2019.
Free cash outflow totaled $10.36 billion at second-quarter 2020 end against free cash flow of $1.28 billion at the end of second-quarter 2019.
Guidance
Due to the uncertainty regarding the timing and conditions related to the 737 MAX fleet’s return to service, Boeing has once again refrained from issuing its guidance for now.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -32.15% due to these changes.
VGM Scores
At this time, Boeing has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boeing has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Boeing (BA) Up 7.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Boeing (BA - Free Report) . Shares have added about 7.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Boeing due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Boeing Q2 Earnings Miss Estimates, Sales Decline Y/Y
Boeing incurred adjusted loss of $4.79 per share for second-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.93. However, the bottom line improved from the year-ago quarter’s loss of $5.82.
Including one-time items, the company posted GAAP loss of $4.20 per share compared with loss of $5.21 registered in the second quarter of 2019.
Revenues
In the quarter under review, Boeing’s revenues amounted to $11.81 billion, which missed the Zacks Consensus Estimate of $12.61 billion by 6.3%. The top line declined25% from the year-ago quarter’s figure of $15.75 billion. This decline was due to lower year-over-year revenues that the company’s segments recorded in the reported quarter, except its defense unit.
Total Backlog
Backlog at the end of second-quarter 2020 slipped to $408.7 billion from $438.6 billion at the end of first-quarter 2020.
Segmental Performances
Commercial Airplane: Revenues at this segment plunged 65% to $1.63 billion due to lower delivery volume. The segment incurred operating loss of $2.76 billion compared to loss of $4.95 billion in the year-ago quarter.
Boeing delivered 20 commercial planes during the quarter under review, down 78%.
Backlog for this segment remains healthy with over 4,500 airplanes valued at $326 billion.
Boeing Defense, Space & Security (BDS): This segment recorded revenues worth $6.59 billion in the second quarter, reflecting almost no year-over-year change. While COVID-19 had an adverse impact on derivative aircraft programs, higher volume across the remainder of the portfoliooffset that impact.
Meanwhile, this unit generated operating income of $600 million, compared with $975 million in the year ago quarter.
Backlog at BDS was $64 billion, 31% of which comprised orders from international clients.
Global Services: Revenues at this segment declined 23% to $3.49 billion on account of COVID-19 impacts. Moreover, this unit incurred operating loss of $672 million against operating income of $687 million in the year-ago quarter.
Boeing Capital Corporation (BCC): This segment reported quarterly revenues of $69 million compared with $75 million registered in the year-ago quarter.
At the end of second-quarter 2020, BCC's portfolio balance was $2.1 billion.
Financial Condition
Boeing exited the second quarter with cash and cash equivalents of $20 billion, and short-term and other investments of $12.44 billion. At the end of 2019, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $58.46 billion at the end of the reported quarter, up from $19.96 billion at 2019 end.
Boeing’s operating cash outflow at the end of the second quarter was $9.58 billion against cash inflow of $2.20 billion at the end of June 2019.
Free cash outflow totaled $10.36 billion at second-quarter 2020 end against free cash flow of $1.28 billion at the end of second-quarter 2019.
Guidance
Due to the uncertainty regarding the timing and conditions related to the 737 MAX fleet’s return to service, Boeing has once again refrained from issuing its guidance for now.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -32.15% due to these changes.
VGM Scores
At this time, Boeing has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boeing has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.